Does it make a difference who is the mortgage borrower and co-borrower in this scenario?

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I assumed a mortgage loan with a balance of $ 220K almost 12 months ago from my Dad and Mom. Since they bought the house in 1997, they have been paying the monthly mortgage of which is now $ 1800, until now. They wanted me to assume the loan so I can take advantage of the tax break. I do not live with them and a quitclaim deed has been recorded. The outstanding mortgage loan only appears in my credit record, but not my wife. We basically have the same credit score of close to 800. We now want to buy our own house. Will it make a difference if my wife is the borrower and I am a co-borrower since I have this mortgage on my credit record? Will it help with us keeping our debt-to-income ratio low, regardless of the fact that I do not pay the monthly mortgage of $ 1800? We are here in California, if it makes any difference at all.

Any response will be appreciated.
Kemperk-I spoke with the loan consultant and was told to provide a copy of cancelled checks for the last 12 months to show that it is my Dad who is actually paying the monthly mortgage. I also thought about your suggestion of having another person assume the existing loan so I can get it out of my credit record. In addition, I may just end up adding another co-borrower for the new loan besides me and my wife.

  1. Reply
    April 30, 2011 at 1:18 am

    No, it will hurt you, the 1800 counts against you, it is your debt, from your income. It will lower the amount you are about to borrow, about 225-250k.

  2. Reply
    April 30, 2011 at 1:27 am

    If you both apply for a new loan, you are both coborrowers – period. There is no “primary” and “secondary.” The prefix “co-” means together as one.

    If the current loan is now is your name, it reports against you regardless of who is actually making the payments.

  3. Reply
    April 30, 2011 at 1:35 am

    if you and your wife are both on the mortgage, then you are ‘co borrowers’ there is no ‘primary borrower’ and second borrower. You are both equally liable.

    I thinkt hat if your name is on the deed of your parents home you can’t qualify for the $ 8000 first time home buyers credit.

    Any debt you have (including that mortgage you assumed from your parents) is indeed going to count against you when you apply for your new mortgage on this home you want to purchase. It doesn’t matter that you aren’t actually paying the mortgage, you are liable for it so it counts as your debt..

  4. Reply
    April 30, 2011 at 2:12 am

    now, ask your banker from whom you want to get your new loan.

    get off the loan[s] that are not for your own home ASAP

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